BlackBerry launches its Classic smartphone to attract enterprises

In the previous part of this series, we discussed why BlackBerry (BBRY) couldn’t reap the benefits of the Passport’s successful launch last quarter. BlackBerry introduced another important smartphone last month—the Classic. As the name suggests, the Classic takes brings back old BlackBerry features along with the re-introduction of the physical keyboard.

After the launch of the BlackBerry 10 operating system in 2013, the company had stopped introducing smartphones with physical keyboards and launched touch-screen phones only. BlackBerry may have changed this strategy due to the increasing popularity of Apple’s (AAPL) iPhone and other touch-screen smartphones introduced by Samsung (SSNLF), Sony (SNE), and Lenovo (LNVGY). However, BlackBerry quickly realized that it can’t compete in this market—and it’s better that it focuses on what it had been doing best, which is catering to enterprise professionals’ productivity needs.

Enterprise customers have remained die-hard fans of BlackBerry’s smartphones due to their physical keyboard. The physical keyboard provides ease of use for working professionals—especially for writing emails and taking calls—which is why BlackBerry listened to their demands and brought back this feature.

BlackBerry introduced superior features in the Classic

The Classic has better specifications that its predecessor, the Bold 9900 smartphone. The Classic’s screen size is larger than the Bold’s at 3.5 inches, although much smaller than the 5.5-inch Apple iPhone 6 Plus screen size. It has a dual core 1.5 GHz Qualcomm (QCOM) Snapdragon processoralong with 2 GB of RAM. The above chart shows the difference between the Classic and the Bold 9900, which makes the Classic a superior smartphone to the Bold in terms of specifications.

BlackBerry: A Year In Review

Can BlackBerry Be The Comeback Kid?

For years the market has pronounced the death of BlackBerry. As another year comes to a close, I find myself reflecting on what has transpired with BlackBerry and the mobile industry. The name BlackBerry was synonymous with mobile phones, keyboards and email. Today, some of these elements still hold true. In a market where all smartphones look similar, BlackBerry returned to its signature physical QWERTY keyboard on the recently released Classic and also offered a keyboard on a square shaped phone called the Passport. I had the opportunity to use the Passport and appreciated its screen size and keyboard.

Yet, the mobile market has evolved and so to has BlackBerry. It would be foolish to think of BlackBerry as solely a mobile phone manufacturer. It’s clear that phones are a part of its vision but not the entirety of its vision. Smartphone sales won’t be the linchpin for a market turnaround.

A Year of Big Announcements

For a theoretically dying company, BlackBerry has been very busy. It returned to its roots as an enterprise company and strengthened its position as a security company. It’s defining a path to evolve from a hardware company to a software and services firm. Let’s recap a few of BlackBerry’s accomplishments over the past year. The company:

Bolstered its consumer app story via a partnership. One of the big knocks against BlackBerry (and Microsoft for that matter) was its lack of consumer mobile apps. The ability to run Android apps on a BlackBerry has lessened this concern. To further alleviate this problem, BlackBerry struck a deal with the Amazon Appstore to make it easier to download apps. It also expanded its enterprise focused mobile application ecosystem through partnerships with Bloomberg LP, Box, CellTrak, Cisco, Entrust, SAP, and others.
Made a significant play for the enterprise mobile management market. EMM is a critical part of any enterprise mobile strategy. BlackBerry was known for management of its devices but needed to offer these services across a wider range of mobile operating systems. The company offered cross-platform mobile device management in BES12. It also inked deals with BrightStar and Ingram Micro to distribute BES12.
Bolstered its security across all product categories from phones through software. It purchased Secusmart to provide additional voice and data encryption and anti-eavesdropping solutions. It acquired Movirtu, a Virtual SIM platform that allows employees to have two phone numbers (read split between corporate and personal use) on a single device. It announced BlackBerry Blend for the enterprise which makes it possible for employees to securely accessing personal and work data from their BlackBerry smartphone on any desktop or tablet. It also offered Enterprise Identity by BlackBerry, VPN Authentication by BlackBerry, and BBM Protected (for Android, BlackBerry and iOS platforms). In general, the company has been heavily focused on providing a wide range of security solutions.
Added new partners. In a surprise move, BlackBerry partnered with Samsung to deliver richer mobile security for Android. It also signed a strategic agreement with Salesforce.com to connect Salesforce.com customer relationship management (CRM) apps and platforms to BlackBerry’s EMM solution.

These are just a selection of the company’s announcements. Overall, it was a good year for BlackBerry. The company invested heavily in developing and acquiring solutions to meet enterprise mobility demands. It also quelled fears that it would run out of cash by effectively managing its supply chain, inventory, and expenses.

While it still declined in smartphone market share, phones aren’t the future lifeblood of the company. (In fact, it’s hard for anyone except Apple and Samsung to earn a living at making phones.) I expect smartphones will become just one piece of an integrated, highly secure portfolio that includes software and services. A business customer can either purchase these devices as part of the holistic solution or simply choose to use the software and services.

As I look around the globe, the studies from Lopez Research highlight that companies are reevaluating BYOD. They’re still offering BYO program but many are also considering purchasing devices for their employees (especially for tablets and next generation PCs). In certain areas, specifically regulated and security conscious industries, BlackBerry could see new device purchases as the corporate-liable market regains steam. For example, Mackenzie Health, a regional healthcare provider serving a population of more than half a million people, announced that it will use the BlackBerry Classic and BES12. But the real win for BlackBerry will be in providing new security and identity/authentication services and management for non-traditional devices, such as IoT.

In the Long Run, BlackBerry Is A Software Company

While I’m certain that BlackBerry bashing will continue, BlackBerry has survived yet another year and in far better shape than any of us had expected. It’s stabilized and proven that it can shift its focus to upcoming growth markets such as security, identity and the Internet of Things. The challenge in the coming year is growth as a software company. This is no small feat given that almost half of BlackBerry’s revenue comes from hardware sales. It’s also not easy to grow into a software behemoth. For example, it took Salesforce.com years to become a software powerhouse. It’s not impossible. It just takes time and the financial market is an unforgiving place.

This will be a multiyear journey for BlackBerry. The market should expect BlackBerry’s revenue to take a hit as it manages this transition. With careful money management, the company should the cash ($3 billion) to navigate the transition to a software company. Businesses should evaluate BlackBerry based on its stated direction and execution against that vision. This year has been a good start.

Maribel is the founder of Lopez Research LLC, a market research firm focused on mobility. She’s also the author of the Wiley book “Right-time Experiences: Driving Revenue with Mobile and Big Data.”

Year End Tax Planning / Read more on Offshore Tax Shelters http://www.youroffshoremoney.com

It Has a Fantastic Physical Keyboard, Great Productivity Apps and Even a Trackpad

A traditional keyboard and trackpad make the BlackBerry Classic a throwback to the smartphone’s early days. WSJ’s Joanna Stern reviews the best BlackBerry ever.

By JOANNA STERN

BlackBerry began shipping the Classic last week, a smartphone that the company hopes will send us all the way back to the early 21st century, when keyboards had keys and apps were what you ordered at TGI Fridays.

The Classic is a throwback to everything that made a BlackBerry a BlackBerry. Instead of a big and awkward square-shaped design like the recent BlackBerry Passport, the Classic has the fantastic physical keyboard, the pleasantly nagging red notification light—and even a trackpad. And forget “Tiny Wings,” this baby has “Brick Breaker”!

The Classic—which currently costs $450 unlocked on Amazon, and will arrive at Verizon and AT&T in the new year—harks back to when smartphones were used primarily for email and other work. That’s great if you just want to get more done with a physical keyboard and powerful productivity apps, but frustrating if you want more. For anything beyond basic Web surfing—like Netflix, Google Maps, Uber, even airline apps like JetBlue—you’re better off with a more modern phone.

Time for a Comeback
For former BlackBerry users, the Classic will feel like reuniting with a long-lost friend. As I hopped on the train and quickly pulled the phone out of my pocket to write down a quick thought for an article, I imagined Etta James’s “At Last” playing in the background.

Unlike the BlackBerry Passport, the Classic is perfect for one-hand use. With a stainless steel frame and a soft plastic back, the 6.3-ounce phone feels heavy, but in a good way. And it feels more substantial than those delicate big-screen smartphones, like it won’t shatter after an accidental drop.

I have been searching for just the right words to profess my love to BlackBerry’s perfected physical keyboard for a decade. It’s hard to describe how my thumbs dance on the fantastically sculpted keys without having to look down at them, or how the metal frets give the perfect amount of spacing to the rows.

But I’m not unreasonably nostalgic. No other smartphone makers sell phones with actual plastic keys anymore. Software keyboards with auto correct and predictive text can do nearly everything real keys can, then vanish when they aren’t needed. Still, I remain optimistic that a few outliers like the Classic will survive long enough to see, at least, the next president.

The Classic’s physical keyboard has fantastically sculpted keys.

Between the keyboard and screen, BlackBerry has resurrected the “belt” of navigation buttons—menu, back and call/hang-up, along with the mouselike trackpad.

BlackBerry could have used that space to make the screen bigger. The crisp 3.5-inch, 720 x 720-pixel touch screen is rather cramped. Yet I was surprisingly happy to see the return of the trackpad. It’s great for editing emails with more precision and selecting small links on Web pages.

BlackBerry may have fallen behind its competitors in mobile innovation over the past decade, but it still leads the pack in two mobile essentials: battery life and call quality.

Even on days of heavy use, I had 20% remaining before going to bed. I still do wish the Classic’s battery was removable (for swapping out or attempting the old-school reboot trick) and didn’t take so long to recharge.

And it’s the BlackBerry Classic—not my iPhone 6 or Moto X—that I reached for when I had to make an important phone call. Not only did the calls sound extremely clear, but people on the other end said I sounded like I was calling from a landline.

The Classic trumps the competition in software with its Hub feature, too. A quick gesture takes you to BlackBerry 10’s universal inbox from any screen, putting communications more readily front and center than other mobile operating systems.

Gone is the Web browser that caused misery to Bold and Curve users. It now loads full-size Web pages by default and does it extremely fast. The small screen means you have to do plenty of pinching and zooming, but at least it renders quickly.

There are far more email-formatting options on the Classic.

The rest of this column could have been a list of reasons why the BlackBerry email and calendar still beat iOS and Android’s for me. In the interest of space, though, here are some favorites: There are far more email-formatting options, including font size and bulleted lists. You can view all the attachments in your inbox, and then easily edit them in Documents To Go. With one tap, you can turn an email chain into a calendar appointment.

BlackBerry is also quick to remind us that one of the Classic’s biggest advantages over the competition is enterprise security. The Classic has system-wide 256-bit AES encryption, and BlackBerry Messenger Protected and the BES email system have end-to-end encryption.

BlackBerry has updated its services to show it understands there’s a need among its users for certain popular features, like BBM video messaging (which includes a sticker store!) and a Siri-like personal assistant that can help send emails and look up popular restaurants. But the company also wants you to be able to keep that work and play separate: Balance puts a secure barrier between your work and personal content and apps.

Stuck in the Past
But while I’d love for all those great BlackBerry features to make a comeback, others simply feel out of date.

Calendar and email aside, other preloaded apps are slow and poorly designed. A Rand-McNally map from the gas station is likely more up-to-date—and speedier—than BlackBerry’s own maps app. Not only did it struggle to help me find the closest Starbucks in New York City, but it lacks typical features like transit directions and 3-D map options.

BlackBerry recommends dissatisfied users try third-party apps, like Waze or Navfree. But while BlackBerrys can run Android apps, the industry-leader Google Maps isn’t available for the platform.

That brings me to the terrible and confusing app situation. There are now two app stores preloaded on the Classic: Amazon’s App Store and BlackBerry World, which sounds like an amusement park I would have loved in 2008. While you can download Android apps from Amazon’s App Store, many big ones are missing—not just the Google family of apps, but also Uber and Instagram.

You can ignore BlackBerry’s warnings and load other Android apps manually, but it takes work. Most apps lying around the Web are out of date or available on shady sites. And if you do find the most recent apps (or go through the annoying process of downloading them on another Android phone and then transferring them to the Classic), they may not resize well to fit the Classic’s square screen.

The Classic has an 8-megapixel camera. ENLARGE
The Classic has an 8-megapixel camera. EVAN ENGEL/THE WALL STREET JOURNAL
I did find and install a year-old version of Instagram. That meant no new filters. But filters can only help so much anyhow: The Classic’s 8-megapixel camera, while fine for basic outdoor or well-lit shots, can’t rival the newest Android and iPhones when it comes to picture quality and speed.

To top it off, I found many of those apps—and even the overall operating system—to be sluggish at times, taking too long to open an app or message.

Still, I believe the Classic is the best BlackBerry ever made. It lives up to every bit of the BlackBerry’s original purpose. This is the best phone to get if you need a real physical keyboard to plow through emails, manage your calendar, browse the Web…and not much else.

When you use it, you will feel like no time has passed at all. And that is, of course, its biggest shortcoming.

“BlackBerry is effectively transitioning to a cross-platform software/services company. In this context, the device business should not be banked on to generate profit,” says TD Securities, upgrading BlackBerry (NASDAQ:BBRY) to Buy after the company reported mixed FQ3 results, a 56% Y/Y drop in end-user phone sales, and a ~100% Q/Q increase in BES10 licenses.

TD sees BlackBerry shipping 8.9M phones in FY16 (ends Feb. ’16) – less than the 10M the company has said it needs to turn a profit on hardware – at a 15% gross margin. ~75% of FY16 gross profit is expected to come from software and legacy services.

BlackBerry has forecast its software revenue will double in FY16, and that its services revenue will fall by 50%. Shares are now above where they traded prior to the FQ3 report.

On top of laser weapons, passenger jets and space stuff Boeing is also, weirdly, building an ultra-secure Android smartphone called “Black” (not to be confused with theBlackphone). According to the Telegraph, it’s now enlisted BlackBerry’s help to make it even more secure, though it’s not clear how, exactly. Blackberry CEO John Chen said “we’re pleased to announce that Boeing is collaborating with BlackBerry to provide a secure mobile solution for Android devices utilizing our BES 12 platform” and quickly added, “that, by the way, is all they allow me to say.” The Boeing Black smartphone recently cleared the FAA FCC and comes with all the stuff a spook or G-man could want.

That includes dual-SIM capability, which is unusual for a US-built device but would be very helpful for intelligence agents. (Incidentally, if you pull a Boeing Black smartphone out at airport security, doesn’t it automatically give you away as a spy?) It also has swappable backplates that allow satellite or radio capability, solar power chargers and biometric sensors. Security-wise, it includes disk encryption, hardware crypto capability and the pièce de resistance: a case that will delete all user data in case of tampering.

Though Boeing’s role in the whole thing may seem odd, it has an inside track with the defense and security community, and specifically developed its Boeing PureSecure system for mobile devices. At this point, BlackBerry is certified for use by the DoD, but as far as we can tell, Samsung’s Knox is still the only system okayed by the NSA to carry classified documents.

BlackBerry (BBRY) shares were sharply lower in early trading. The struggling smartphone maker reported a surprise profit in the third quarter, but a big miss on revenue. Sales were down more than 33% from a year earlier.

TORONTO, Dec 19 (Reuters) – BlackBerry Ltd on Friday reported a small adjusted third-quarter profit and returned to positive cash flow, but shares fell as revenue declined more than expected.

Revenue fell to $793 million from $1.19 billion a year earlier, falling short of expectations. Analysts expected $931.5 million.

Cash flow was positive $43 million in the third quarter, while the company had negative cash flow of $36 million in the second quarter. BlackBerry had said it was targeting break-even cash flow by the end of the fiscal year in February 2015.

S&P (Hold): “We are encouraged by a return to positive cash flow, reflecting margin improvement from cost cutting efforts. We see BBRY growing its mobile device management business … We anticipate BBRY focusing on growing its software offerings and expect its hardware business to remain at depressed levels.” MDM software rival MobileIron (MOBL+6.6%) is up strongly.

Colin Gillis, tech analyst at BGC Partners in New York, said BlackBerry Chief Executive Officer John Chen did a good job controlling expenses to boost the company’s cash pile.

“The fact that he overachieved by turning cash flow positive this quarter. That’s a great milestone,” said Gillis. “It gets easier from here.”

Excluding, a one-time non-cash debenture charge and restructuring charges, the company reported a profit of 1 cent a share. Analysts polled by Thomson Reuters I/B/E/S expected a loss of 5 cents.

The Waterloo, Ontario-based company reported a net loss of $148 million, or 28 cents a share, in the quarter ended Nov. 29. That compared with a year-earlier loss of $4.4 billion, or $8.37 a share.

BlackBerry launched its long-awaited Classic smartphone on Wednesday, hoping to help win back market share and woo customers still using older versions of its physical keyboard devices. The phone resembles its once wildly popular Bold and Curve handsets.

Hint: It’s not about smartphone sales volume or market share.

The BlackBerry Classic, as its name implies, is a throwback to the company’s glory days. But the smartphone plays an important role in BlackBerry’s future.BlackBerry hopes the Classic will drive interest and adoption of the company’s services and software.Josh Miller/CNET
Wednesday’s BlackBerry Classic event kicked off like most other phone launches: a video played to hype up the BlackBerry name, CEO John Chen made a few remarks and then pulled out the Classic for a photo opportunity. But as the presentation went on, it was clear whom the company was targeting: the IT guy working in a highly regulated business.

The conversation dashed past the typical walkthrough of the Classic’s features, with a healthy chunk of time spent on the phone’s enterprise software capabilities. Guests touting the business possibilities included chief information officer for Citco Fund Services, the founder of Niederhoffer Capital Management and the chief operating officer of Ontario-based Mackenzie Richmond Hill Hospital.

It’s a far cry from Alicia Keys, the pop music sensation BlackBerry once played up as its “global creative director.”

CNET review: BlackBerry Classic – great keyboard, cramped screen

The change in tactic is part of BlackBerry and Chen’s attempt to transform the company from a device maker into one more reliant on software and services. Services such as BlackBerry Messenger and its mobile device management platform, BES 12, are the future, but the company still needs BlackBerry phones to keep it in the mobile game — and generating revenue.

The BlackBerry Classic takes its design cues from the BlackBerry Bold franchise — the last flagship BlackBerry line that resonated with consumers. With its familiar trademark keyboard, it serves as a bridge for diehard BlackBerry users still typing away on their old Bold and Curve phones and gives them a reason to upgrade to the new BlackBerry 10 operating system.

While the smartphone was clearly designed to cater to BlackBerry’s existing base, the company hopes to attract new users, touting the physical keyboard, messaging hub and longer battery life as attractive characteristics.

“I invite a lot of people who haven’t used BlackBerrys before to have a try at it,” Chen said. “I think you’ll like it and be surprised by it.”
But with a new generation of users weaned on touch-screen iPhones and Android devices, it’s unlikely that many will take a chance on a platform that still lags behind on games and other personal apps.

“We shouldn’t delude ourselves into thinking they will go after a broad appeal,” Golvin said. He added the only potential customer growth could come from attracting former BlackBerry users into switching back.

“It’s wishful thinking,” said Avi Greengart, an analyst at Current Analysis.

Interest in BlackBerrys has waned over the years. Over the past five years, it went from a peak of a fifth of the market in 2009 to just below 1 percent in the third quarter, according to Gartner.

A quiet launch?

But BlackBerry isn’t competing anymore in the mainstream smartphone market, a rough-and-tumble arena where Apple’s iPhone reigns supreme and rivals such as HTC’s One M8, LG’s G3 and Samsung’s Galaxy S5 battle for second place. While Chen has said his goal was to run a profitable smartphone business, that doesn’t necessarily equate to huge volumes.

Just look at the BlackBerry Passport. The smartphone was launched with much fanfare in September, but aside from early preorder numbers, it has largely faded. AT&T, which vowed to carry the smartphone, won’t carry it until next year. Analysts regard the Passport as more of a novelty.

Given the demand from hardcore BlackBerry users, the Classic may get different treatment. But Chen declined to comment on whether AT&T and Verizon Wireless would provide marketing support for the Classic, which launches in the quieter post-holiday period in January. BlackBerry is taking orders for the Classic now on its own website, selling a version compatible with AT&T and T-Mobile for an off-contract price of $449. AT&T and Verizon haven’t provided specific availability and pricing.

Regardless, the BlackBerry devices play an important role. They remain a major financial pillar, making up 46 percent of the company’s revenue in the fiscal second quarter. The company reports its third-quarter results on Friday.

More critical is the role the phones will play in convincing big businesses to switch to BlackBerry services, according to 451 Research analyst Chris Hazelton. While BES12 is able to manage multiple mobile devices, including iPhones and Android smartphones, the BlackBerry Classic gives the companies reason to upgrade their systems.

BlackBerry is offering the Classic with different enterprise and security bundles, an example of how it hopes to make money off of its security aspect. It’s a sweet spot that Chen, who boasts a strong history with enterprise software companies, wants to get the company moving toward.

“It is very much enterprise focused at this point, and that’s absolutely the future of the company, which I think is a good thing,” said Jan Dawson, an analyst at Jackdaw Research.

Chen also has a more ambitious vision for devices, which goes beyond smartphones. “It’s also the precursor for the whole [Internet of things] market,” he said. “I don’t look at devices as just a phone business. I look at it as much broader downstream.”

BlackBerry today announced the BlackBerry Classic, making official the smartphone that CEO John Chen has teased for the better part of a year. The Classic has a throwback look, as its name alludes, with a full QWERTY physical keyboard, physical navigation keys, and a nearly indistinguishable design from BlackBerry smartphones from years ago, such as the Bold. The Classic is significantly smaller than the Passport, which BlackBerry launched earlier this year, and is actually possible to use in one hand, unlike the gargantuan Passport. BlackBerry says this phone will appeal to those looking for the traditional BlackBerry experience that made those devices so popular so many years ago.

The Classic has a square, 720 x 720 pixel, 3.5-inch touchscreen perched above the keyboard and navigation keys. It’s a bit smaller than the 4.5-inch screen on the Passport, and much smaller than the average smartphone’s display, but it makes it possible to use the Classic in one hand and still have the physical QWERTY keyboard. The phone is powered by an aging dual-core Qualcomm processor from 2012 paired with 2GB of RAM. That likely won’t cut it for modern mobile gaming, but it should be fine for plowing through thousands of emails a day, which is what BlackBerry expects Classic users to do. There’s an 8-megapixel camera on the back of the phone, with a 2-megapixel unit on the front.

The Classic runs BlackBerry 10, which offers productivity tools like the Hub, Assistant, and Blend. It also can run Android apps, which are accessible through the Amazon Appstore that’s preloaded on the device. BlackBerry diehards will be happy to know that the BrickBreaker game is also available on the Classic and can be played like it was on older BlackBerry smartphones.

THE CLASSIC IS A VERY SPECIFIC DEVICE FOR A VERY SPECIFIC SMARTPHONE USER

Appropriately, BlackBerry announced the Classic in the heart of New York’s Financial District, an area of the country where BlackBerry smartphones are still a fairly common sight. Perhaps even more so than the Passport, the Classic isn’t a device that’s going to appeal to the mainstream smartphone consumer, but rather it’s for people who like BlackBerry devices and aren’t looking to browse the web or play a lot of games on their phones. BlackBerry hasn’t been on the minds of consumers for years, so now the company is doubling down on its core business users, and the Classic looks like the strongest play for that field yet.

BlackBerry says the Classic is available starting today “through local carriers around the world”, though it doesn’t seem like any US carriers are offering the device. The Classic is also available unlocked through BlackBerry and Amazon’s online stores for $449.

Before the morning’s proceedings got underway, BGC Partners‘s Colin Gillis raised his rating on the stock to Buy from Hold, and raised his target to $12.50 from $11, citing a positive track record built up by Chen since he took over last year, and that sales of another device, the square-shaped “Passport,” seem to have gone well, and that the company could be at break-even on a cash flow basis when it reports fiscal Q3 results this Friday morning:

While we view the company is in the early stage of turning the business around, management has built up a track record of credibility with investors over the last year by quickly reducing costs and preserving cash, focusing on its core strengths of security and physical keyboards, successfully launching new products, and forming strategic partnerships to fill the gaps […] Sales of the Passport phone could be a source of upside in the quarter even though the company had a limited initial production run that effectively sold out. We expect sales of the Passport phone to provide $270 million in revenue with 450K units sold at an average price of $600 USD. This is 52% of our $518 million hardware revenue estimate, and we expect that the Passport should have a positive impact on overall average selling prices. We mention the phone has been well received in its target market, with 444 5-star reviews out of the 508 total on Amazon for an overall 4.8 rating. We expect the Passport to have a positive margin contribution […] The company is launching its classic phone today, continuing its emphasis on serving its core customer base by highlighting a physical keyboard […] Our view is that BES 12 and the Blackberry sales force need to turn free trial customers into revenue in order to sustain our current positive outlook […] The company is nearing the target date to turn cash flow break even before the end of the fiscal year, and it is possible the company achieves this milestone when it reports on Friday December 16th premarket if there is upside results driven by Passport […] The final reason for our upgrade is that the company has a market capitalization of $5 billion, and any modest level of success in the market can have a meaningful reflection in its current revenues, cash flows, earnings and share price. The nature of a company turning itself around is one of volatility, but the current path for Blackberry is clear and may prove profitable. Our downgrade was based on the thesis that the market may provide a better entry point- that thesis has materialized and now we are raising our rating back to BUY.

“I would prefer to build a lot of value before I even contemplate” selling.

BlackBerry Ltd. Chief Executive Officer John Chen said he wouldn’t be able to accept a takeover offer from a Chinese company even if he got one because Western governments that rely on his phones probably wouldn’t allow it.

“We probably are unable to do that,” Chen said in an interview on Bloomberg TV’s “Studio 1.0,” when asked if he would sell BlackBerry to a Chinese company. “One of our biggest install bases is government in the so-called Five Eyes countries where governments share intelligence. I think there will be a lot of regulatory issues and concerns.”

The Five Eyes is an intelligence cooperation agreement between the U.S., Canada, the U.K., New Zealand and Australia. Waterloo, Ontario-based BlackBerry has focused on its reputation for security as it works to win contracts to manage mobile devices for corporations and governments. U.S. President Barack Obama, German Chancellor Angela Merkel and U.K. Prime Minister David Cameron have all been spotted using the keyboard-equipped device.

Chen, a native of Hong Kong, did say last month that he’s interested in partnerships with Chinese companies to help increase BlackBerry’s presence in the world’s largest smartphone market. He made the comment at the Asia-Pacific Economic Cooperation CEO Summit in Beijing, where he met with the heads of Lenovo and Xiaomi Corp.

Lenovo had expressed interest in a possible deal with BlackBerry last year before the manufacturer tried and failed to sell itself.

For now, Chen said he has no takeover offers on his desk for the US$5.8 billion company.
“Talk is not an offer,” he said. “I would prefer to build a lot of value before I even contemplate” selling.

The BlackBerry Enterprise Services 12 software, which launched last month, is crucial to the future of the company, according to Nick McQuire, analyst at CCS Insight. It will allow company IT departments to manage older BlackBerry devices as well as rival devices using software from Apple and Google.

Bankers were once inseparable from their BlackBerry devices but in recent years have migrated away from sole BlackBerry use and added smartphones and tablets from rival companies and some have abandoned BlackBerry devices altogether.
“If BlackBerry doesn’t stop the dripping away of business, it will become a [relic of a] forgotten era,” says Nick Russell, principal adviser in KPMG’s CIO Advisory team.
Mobile operators say that they were asked by corporate customers about other options ahead of last month’s upgrade, which is being offered for free until next year under BlackBerry’s “EZ Pass” offer. However, BlackBerry will soon start charging for the service, which means that it needs to be sure that its customers are willing to follow.
Ronan Dunne, Telefonica’s UK chief, says that concerns over the longevity of BlackBerry were causing corporate customers to reconsider their IT strategies.
If BlackBerry doesn’t stop the dripping away of business, it will become a [relic of a] forgotten era
– Nick Russell, KPMG

“Most of the conversations are ‘what are the alternatives’. If they don’t have a line of sight for the sustainability of BlackBerry, it’s hard to see too many will continue to upgrade . . . if they don’t know what the road map is.”
Analysts say that the BES12 upgrade is a return to Blackberry’s business roots after a previous version tried largely unsuccessfully to take on the consumer market dominated by brands such as Apple. The BES12 upgrade is designed to unify two existing BES platforms.
John Sims, president of global enterprise services at BlackBerry, says that for regulated industry customers, such as those in financial services, the cross-platform BES12 was more than a small update — “it’s a major step forward in maximising and safeguarding their mobile environment”.

Turnround plans

BlackBerry stakes out business customer

John Chen, chief executive officer of BlackBerry Ltd., speaks during the OASIS: The Montgomery Summit in Santa Monica, California, U.S., on Thursday, March 6, 2014. Chen has surprised skeptics and pleased investors by cutting costs and fueling a 56 percent surge in the smartphone maker’s stock. Photographer: Patrick T. Fallon/Bloomberg *** Local Caption *** John Chen
John Chen was grounded by a typhoon in Hong Kong but he laughs when asked whether BlackBerry is facing similar storms. “It’s still 80:20,” BlackBerry’s chief executive says about his chances of turning around the smartphone company. (In March he rated his chances at just 50:50) “I am actually feeling better than that now but I never use 100:0 as that would jinx us. But we are definitely out of danger.”

He says: “This very real security threat is why enterprises choose and trust BlackBerry. We have the unique combination of meeting any mobile deployment model — whether it’s bring your own device or corporate-owned, personally enabled — while never sacrificing the productivity or security needs of our customers.”
KPMG’s Mr Russell, who helps advise banks on their workplace IT strategy, says that BlackBerry has come under pressure from a general “consumerisation of IT”. Companies are now looking at using different IT tools for different employees: “In the past everyone might have got a BlackBerry [ . . .] Now it’s a deeper conversation about what’s the right device for each user. ”
Some bankers are pushing back as BlackBerry urges them to upgrade to the latest software amid concerns. about the company’s long-term health. Its share of consumer markets has fallen below 1 per cent in key European countries according to researchers Kantar.“Everyone is being somewhat cautious as to how to approach BlackBerry,” says a managing director at a large bank. “No one wants to make a long-term commitment to upgrading IT platforms if there is a residual risk as to whether that partner is going to be around for a long time.”
Mr Dunne says that BlackBerry was also hampered by a lack of popular consumer devices. Companies with huge consumer businesses such as Samsung and Apple are rapidly gaining business customers. Both are benefiting from the “bring your own device” strategies that allow many workers to use their personal phones for work.

Dispatches from the tech world: FT experts in San Francisco, London and Taipei upload their views
BlackBerry chief executive John Chen has been applauded by investors for his work in turning around the ailing Canadian device maker since becoming Blackberry’s chief executive last year. He has cut costs, and set out a clearer strategy of wooing core users by playing up BlackBerry’s security advantages.
New devices have included the square-shaped Passport, as well as a return to older styles with the so-called BlackBerry Classic. “The transformation of BlackBerry is well under way,” says Mr Sims. “We are on track to be cash flow break even by the end of the fiscal year. The positive support we’re seeing from our enterprise customers is helping us on this path.”
He says that more than 5m BES client access licences have been registered since the EZ Pass migration programme launched in March. “More than 30 per cent of these licences have been traded in from competitors’ platforms.”
There are signs that the group has been recovering ground with its core corporate client base. According to IDC, BlackBerry improved market share in the commercial segment in the last couple of quarters after falling rapidly to a low of 1.7 per cent in the first quarter
And some bankers say they still favoured the BlackBerry keypad for writing emails, which constitutes much of their use. A managing director at a large US bank says: “The reason we live on our BlackBerrys is not because it’s the best device but because we’re used to it and because it has a decent keyboard you can type on.”

John Chen, CEO of BlackBerry,

hoping to create some buzz for the company’s “new/old” BlackBerry Classic device, set for release later this year.

Here are some of the more notable lines from his letter:

“To our loyal (current and former) BlackBerry users: BlackBerry is driven by an
urgent, obsessive focus on what matters: you. When we lose sight of what you want and you need, we lose you. It’s tempting in
a rapidly changing, rapidly growing mobile market to change for the sake of change – to mimic what’s trendy and match the
industry-standard, kitchen-sink approach of trying to be all things to all people. But there’s also something to be said for the
classic adage, if it ain’t broke don’t fix it. BlackBerry Classic reflects that. It is classic BlackBerry – complete with a top row of
navigation keys and a trackpad. It’s the device that has always felt right in your hands and always felt right in your busy
day…Innovation is a word that gets used too often and carelessly. Innovation is not about blowing up what works to make
something new – it’s about taking what works and making it better…You don’t reinvent yourself every day; you take what you
learned yesterday and sharpen it today. You drive change – often on your terms, but sometimes not. That you keep going
regardless is what distinguishes you as a grown-up. You’re in it for the long haul. So is BlackBerry. The things you remember
about BlackBerry that made you better are better than ever with BlackBerry Classic. BlackBerry Classic is for you, as is
everything we do every day.“